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Why the high street needs the internet

Last year Mary Portas released 'The Portas Review', which set out her recommendations for reviving the high streets of Britain's towns and cities.

As we said at the time, she seemed to have a blind spot as far as the role of the internet and digital technology is concerned. In fact, the report said that the internet 'is one of the key threats to retail on our high streets'.

We see it differently: the internet is vital to the future of the high street.

In our new report, 'How the Internet can save the High Street', (free for Bronze members upwards) we explore how digital technology can be used to drive footfall to the high street, and to enhance the in-store experience for consumers.

Here are a few highlights from the report....

Consumer trends

The internet is not going away, so retailers need to adapt to changing consumer behaviour, or face losing business to savvier competitors.

The growth of e-commerce, as well as smartphone penetration and increased use of mobile internet, offers some serious challenges to high street businesses.

Let's look at the stats:

80% of UK shoppers have reserved products online for collection in stores (up from 74% in 2011).

43% of UK shoppers now use smartphones while on the move to compare prices and read product reviews (up from 19% last year).

Have you used your mobile to compare prices and look at product reviews while out shopping?

Driving more footfall into stores

The report looks at a number of ways that retailers can use the web to drive customers into their stores, including the use of vouchers, social media, location-based marketing and mobile.

For many offline purchases, the research process begins online. A recent Econsultancy survey, carried out using TolunaQuick, found that 44% of UK consumers always research purchases online before actually buying in-store, while a further 52% sometimes check online before buying in-store.

Therefore, high street stores must have a website which, at the very least, allows potential customers to access information about the product range and location.

If I was a small offline retailer on a budget, I’d start by building a tight website with the store’s products and ranges and preferably with some transactional capability which can be fulfilled from the store itself.

Ensure that the website has a really good store locator and that all the content can be accessed on a mobile. Then add a small paid search budget across some long tail terms and keep reinvesting any profits into growing the online range. Then as soon as the budget will allow – add in the capability to order from the website in the store.

Reserve and collect

Allowing customers to reserve items online for in-store collection is a must for multichannel retailers. It fits nicely with consumer product research patterns, and has paid dividends for those companies which have adopted it.

For example:

Argos is the original success story for reserve and collect, having launched its own service more than ten years ago. Check and Reserve accounted for 29% of Argos' £819m sales in Q1 2012.

Halfords introduced a click and collect service, and now 86% of all its online sales are for in-store collection.

According to Andy Harding, 35% of House of Fraser's online orders are being collected in store. Also, around 25% of people collecting in store make an additional purchase when there.

Enhancing the in-store experience

As well as using the web to help to attract customers to the high street, businesses can also use this technology to provide a more useful and enjoyable shopping experience for customers.

For example, relatively new technology like interactive mirrors can provide a 'wow' factor for shoppers, while at the same time being useful, and enabling them to share their images on social sites and spread the word.

We will see more stores using digital technology. Indeed, M&S just opened its new Cheshire Oaks store, with an array of digital goodness, such as Wi-Fi, video screens and virtual counters.

Perhaps the most effective thing that offline retailers can do is to adapt to the growth of smartphone adoption and appeal to mobile users.

Using mobile

Mobile, and the use of apps and sites for price comparison, offers a very obvious threat to offline retailers as shoppers can often find the same product cheaper online.

However, the high street retailer needs to use all of the advantages they can offer to counter such a threat.

Get customers to use your mobile site or apps

The first thing is to accept that shoppers are going to use their mobiles in store. If customers are going to pick up their phones and look for reviews, persuade them to use your site for this. Promote it in store.

If you can provide the reviews they need, then customers won't have to use competitors' sites where they might find a better deal.

Better still, provide them with a link on the store shelf where they can find reviews, or maybe a QR code or barcode to scan and view further information.

Provide wi-fi

Make sure shoppers can access the internet on their phones when in stores. This will improve the experience for them, and ensure that they can access mobile sites and apps, scan barcodes etc.

In addition, having customers logged in to wireless networks on their phones can allow retailers to target them with very precise and timely offers.

One great example of this came from the French Casino supermarket chain. Its iPhone app allows users to compile shopping lists before heading to the store, where they can use their mobile to scan and pay for items in store.

This is useful for the customer, but also provides the retailer with a wealth of information of the customer's preferences and shopping habits. It also gives Casino the ability to target customers in real time, according to their location.

This is something that UK retailers, including House of Fraser, Tesco and Debenhams have been trying out.

Conclusion

While it's very easy to see the internet as the enemy of offline retail, and to blame it every time an offline retailer fails, this is a short-sighted view.

Quite often, it is the inability of businesses to adapt to the challenges posed by the web that causes their downfall.

Those that have embraced the internet to provide an excellent multichannel offering, such as John Lewis and Next, are managing to grow sales during a recession. Indeed, it is often the online and multichannel sales that are compensating to poor high street revenues.

While The Portas Review contained some solid recommendations, it is essential that high street businesses learn to love the internet and use it to their advantage.

Hiya, I suppose I'm asking all "UK shoppers" - what's the sample group and age range please? I am geniunely interested in this statistic because not very many sites offer it so I'm amazed that the "argos" factor is that strong across such a wide range. Fascinating but really keen to know size of group questioned etc.

I think most of the big multichannel retailers - John Lewis, Argos, Tesco, HoF, Debenhams etc - now offer it, and they account for a fair chunk of the retail market.

over 5 years ago

Stuart McMillan, Deputy Head of Ecommerce at Schuh

If anyone is looking for a beautiful example of the internet meeting traditional retail, Burberry's Regent St store is well worth checking out. From interactive mirrors to assistants carrying ipads for online ordering.

At Schuh we have a good uptake of click and collect, and also the checking and reserving online of store stock, it's becoming part of what customers now expect from retailers.

Yes, that Burberry store looks a great example. They were just a little late to be included in the report.

On reserve and collect - I think it's got to the point now where it's an essential feature for multichannel retailers.

over 5 years ago

Graeme Benge, Digital Marketing Executive at Koozai

Your website is literally a 24 hour 7 day a week shop window, can't imagine many shops that wouldn't benefit from showing inventory, highlighting personalities and other aspects that can drive people in store.
As for the internet killing businesses, it's a great soundbite. Many of these businesses could equally have been accused of not moving with the times enough.

I was at google two weeks ago for a retail event with Mary talking. Interesting to hear her present her opinions and her visions for the uk's dying town centre's to a room full of Internet people. She rarely touched on multichannel as a key driver of footfall to the high street but we are also experiencing this increasingly important growing trend of ordering online to collect in the store. Times have moved on and Mary's vision is out of date and a step back in time.

If Clinton Cards closed down due to another firms efficiency, Alan Sugar would have referred to it as Competition Economics. Not only does his example of Clinton Cards offer a case study as to why the internet is a huge efficiency enhancing mechanism, it also exemplifies how a large company did not adopt this important technology into their model. If they're going down, its the result of bad business decisions - not the internet.

Not adopting technologies that can either deliver a competitive advantage, or at least keep up with the competition, implies the firm are not competitive. And, let's face it, they weren't ever really competitive. The prices of their cards are/were a joke.

@Anthony - Exactly, they totally failed to adapt to the likes of Moonpig. Also, I'd prefer to buy cards from shops like M&S, or local shops than Clintons.

Have you seen Clintons' website?

over 5 years ago

Seema Kumari, Head of Digital Marketing at Hearst Magazines

Retailers need to wise up and ensure they can convert customers online if they don’t purchase in store.In an ideal world (for me!) all products within the store should come with an easy product description which can then be entered and identified in their website search bar. QR codes could work, so if my size isn’t available in store I can be directed to the product without any fuss.
If retailers become really sophisticated perhaps they can have a few ipads around the shop floor/fitting rooms so if a particular size isn’t available, you can order the product online whilst still being in the store environment. Retail stores are so disconnected from their websites and need to wake up!

over 5 years ago

Ian Gregory

Yes she was and she clearly has an appreciation for the role that social media has to play in multichannel. But she seems to miss the wider opportunities with multichannel and the research online purchase offline (ropo) effect and mobile - maybe through lack of knowledge in this area. It's a new concept but given how high profile this report has been and the importance of the internet to the economy you would think that someone would have advised her.

These findings certainly fit well with our own just-released report – Town Centre Futures 2020 – which also looked closely at the continuing rise of internet shopping.

The internet must not be considered in isolation, however, and retailers should also look at how the population will change over the next decade. According to our research, 79 percent of UK town centres will experience at least a ten percent growth in their 50+ population between 2012 and 2020 – as well as a significant reduction in the number of teenagers – so access to relevant services and shops will also be critical to a high street’s success.

Furthermore, many consumers are becoming more price-conscious and more capable of searching for the best deal. With this and the growing importance of internet shopping in mind, it’s critical for high street stores to offer the kinds of services that allow consumers to get the deal they’ve seen online and to market themselves as convenient hubs for picking up products – for example through real-time vouchers and loyalty apps, and the Click and Collect schemes mentioned in the article and by Stuart from Schuh.

To really thrive on the UK high street, we firmly believe that retailers must adopt a blended, multichannel approach to marketing themselves that reflects their evolving customers’ demands.

over 5 years ago

Luis Pires

Interesting to note that, in the consumer goods industry, that tends to be a little more conservative, players that invested in the internet some 10 years ago are becoming the national power houses and starting to dominate the market place. Furthermore, these players are starting to compete, with a much smaller footprint, with larger national accounts.

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